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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-35416
 slca-20200630_g1.jpg
U.S. Silica Holdings, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware 26-3718801
(State or other jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
24275 Katy Freeway, Suite 600
Katy, Texas 77494
(Address of Principal Executive Offices) (Zip Code)
(281) 258-2170
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par value SLCA  New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  þ    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ  Accelerated filer ¨
Non-accelerated filer ¨  Smaller reporting company 
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes    No  þ
As of July 28, 2020, 73,890,521 shares of common stock, par value $0.01 per share, of the registrant were outstanding.




U.S. SILICA HOLDINGS, INC.
FORM 10-Q
For the Quarter Ended June 30, 2020
TABLE OF CONTENTS
 
  Page
PART IFinancial Information (Unaudited):
PART IIOther Information:



PART I-FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; dollars in thousands)
June 30,
2020
December 31,
2019
ASSETS
Current Assets:
Cash and cash equivalents$158,676  $185,740  
Accounts receivable, net158,346  182,238  
Inventories, net107,830  124,432  
Prepaid expenses and other current assets33,046  16,155  
Income tax deposits  475  
Total current assets457,898  509,040  
Property, plant and mine development, net1,453,778  1,517,587  
Operating lease right-of-use assets44,966  53,098  
Goodwill185,649  273,524  
Intangible assets, net167,050  183,815  
Other assets13,369  16,170  
Total assets$2,322,710  $2,553,234  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses$125,921  $248,237  
Current portion of operating lease liabilities45,015  53,587  
Current portion of long-term debt38,456  18,463  
Current portion of deferred revenue12,664  15,111  
Total current liabilities222,056  335,398  
Long-term debt, net1,210,518  1,213,985  
Deferred revenue32,968  35,523  
Liability for pension and other post-retirement benefits65,532  58,453  
Deferred income taxes, net45,504  38,585  
Operating lease liabilities100,667  117,964  
Other long-term liabilities 32,197  36,746  
Total liabilities1,709,442  1,836,654  
Commitments and Contingencies (Note O)
Stockholders’ Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; zero issued and outstanding at June 30, 2020 and December 31, 2019
    
Common stock, $0.01 par value, 500,000,000 shares authorized; 82,986,454 issued and 73,876,427 outstanding at June 30, 2020; 82,601,926 issued and 73,601,950 outstanding at December 31, 2019
826  823  
Additional paid-in capital1,192,068  1,185,116  
Retained deficit(386,110) (279,956) 
Treasury stock, at cost, 9,110,027 and 8,999,976 shares at June 30, 2020 and December 31, 2019, respectively
(181,413) (180,912) 
Accumulated other comprehensive loss(22,910) (19,854) 
Total U.S. Silica Holdings, Inc. stockholders’ equity602,461  705,217  
Non-controlling interest10,807  11,363  
Total stockholders' equity613,268  716,580  
Total liabilities and stockholders’ equity$2,322,710  $2,553,234  
The accompanying notes are an integral part of these financial statements.
2


U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; dollars in thousands, except per share amounts)
 Three Months Ended 
 June 30,
Six Months Ended   
June 30,
 2020201920202019
Sales:
Product$160,200  $303,041  $382,361  $599,901  
Service12,337  91,813  59,775  173,703  
Total sales172,537  394,854  442,136  773,604  
Cost of sales (excluding depreciation, depletion and amortization):
Product114,130  225,473  279,626  460,389  
Service10,613  68,687  46,434  131,309  
Total cost of sales (excluding depreciation, depletion and amortization)124,743  294,160  326,060  591,698  
Operating expenses:
Selling, general and administrative39,126  38,659  69,178  73,315  
Depreciation, depletion and amortization37,086  44,899  75,535  89,499  
Goodwill and other asset impairments3,956    107,822    
Total operating expenses80,168  83,558  252,535  162,814  
Operating (loss) income(32,374) 17,136  (136,459) 19,092  
Other (expense) income:
Interest expense(22,179) (23,765) (44,456) (47,743) 
Other (expense) income, net, including interest income(1,670) 15,074  16,001  15,796  
Total other expense(23,849) (8,691) (28,455) (31,947) 
(Loss) income before income taxes(56,223) 8,445  (164,914) (12,855) 
Income tax benefit (expense)23,605  (2,384) 59,691  (412) 
Net (loss) income$(32,618) $6,061  $(105,223) $(13,267) 
Less: Net loss attributable to non-controlling interest(264) (89) (524) (93) 
Net (loss) income attributable to U.S. Silica Holdings, Inc. $(32,354) $6,150  $(104,699) $(13,174) 
(Loss) earnings per share attributable to U.S. Silica Holdings, Inc.:
Basic$(0.44) $0.08  $(1.42) $(0.18) 
Diluted$(0.44) $0.08  $(1.42) $(0.18) 
Weighted average shares outstanding:
Basic73,620  73,301  73,545  73,165  
Diluted73,620  73,505  73,545  73,165  
Dividends declared per share$  $0.06  $0.02  $0.13  
The accompanying notes are an integral part of these financial statements.
3


U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited; dollars in thousands)
 Three Months Ended 
 June 30,
Six Months Ended 
 June 30,
 2020201920202019
Net (loss) income$(32,618) $6,061  $(105,223) $(13,267) 
Other comprehensive loss:
Unrealized gain (loss) on derivatives (net of tax of $675 and $(660) for the three months ended June 30, 2020 and 2019, respectively, and $742 and $(959)for the six months ended June 30, 2020 and 2019, respectively)
2,117  (2,071) 2,328  (3,011) 
Foreign currency translation adjustment (net of tax of $102 and $49 for the three months ended June 30, 2020 and 2019, respectively, and $10 and $(11) for the six months ended June 30, 2020 and 2019, respectively)
320  165  31  (34) 
Pension and other post-retirement benefits liability adjustment (net of tax of $(91) and $(1,112) for the three months ended June 30, 2020 and 2019, respectively, and $(1,725) and $(1,057) for the six months ended June 30, 2020 and 2019, respectively)
(287) (3,491) (5,415) (3,317) 
$(30,468) $664  $(108,279) $(19,629) 
Less: Comprehensive loss attributable to non-controlling interest(264) (89) (524) (93) 
Comprehensive (loss) income attributable to U.S. Silica Holdings, Inc.$(30,204) $753  $(107,755) $(19,536) 
The accompanying notes are an integral part of these financial statements.
4


U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited; dollars in thousands, except per share amounts)
Common
Stock
Treasury
Stock
Additional
Paid-In
Capital
Retained Earnings
(Deficit)
Accumulated
Other
Comprehensive
Loss
Total U.S. Silica Holdings Inc., Stockholders’
Equity
Non-controlling InterestTotal
Stockholders’
Equity
Balance at March 31, 2020$824  $(181,369) $1,187,962  $(353,862) $(25,060) $628,495  $11,099  $639,594  
Net loss—  —  —  (32,354) —  (32,354) (264) (32,618) 
Unrealized gain on derivatives—  —  —  —  2,117  2,117  —  2,117  
Foreign currency translation adjustment—  —  —  —  320  320  —  320  
Pension and post-retirement liability—  —  —  —  (287) (287) —  (287) 
Cash dividend declared—  —  —  106  —  106  —  106  
Distributions to non-controlling interest—  —  —  —  —  —  (28) (28) 
Common stock-based compensation plans activity:
Equity-based compensation—  —  4,108  —  —  4,108  —  4,108  
Tax payments related to shares withheld for vested restricted stock and stock units2  (44) (2) —  —  (44) —  (44) 
Balance at June 30, 2020$826  $(181,413) $1,192,068  $(386,110) $(22,910) $602,461  $10,807  $613,268  
Balance at March 31, 2019$820  $(180,125) $1,173,259  $43,920  $(15,985) $1,021,889  $12,209  $1,034,098  
Net income—  —  —  6,150  —  6,150  (89) 6,061  
Unrealized loss on derivatives—  —  —  —  (2,071) (2,071) —  (2,071) 
Foreign currency translation adjustment—  —  —  —  165  165  —  165  
Pension and post-retirement liability—  —  —  —  (3,491) (3,491) —  (3,491) 
Cash dividend declared ($0.0625 per share)
—  —  —  (4,846) —  (4,846) —  (4,846) 
Contributions from non-controlling interest—  —  —  —  —  —  400  400  
Common stock-based compensation plans activity:
Equity-based compensation—  —  2,799  —  —  2,799  —  2,799  
Tax payments related to shares withheld for vested restricted stock and stock units1  (650) (1) —  —  (650) —  (650) 
Balance at June 30, 2019$821  $(180,775) $1,176,057  $45,224  $(21,382) $1,019,945  $12,520  $1,032,465  






5


U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)
(Unaudited; dollars in thousands, except per share amounts)
Common
Stock
Treasury
Stock
Additional
Paid-In
Capital
Retained
(Deficit) Earnings
Accumulated
Other
Comprehensive
Loss
Total U.S. Silica Holdings Inc., Stockholders’
Equity
Non-controlling InterestTotal
Stockholders’
Equity
Balance at December 31, 2019$823  $(180,912) $1,185,116  $(279,956) $(19,854) $705,217  $11,363  $716,580  
Net loss—  —  —  (104,699) —  (104,699) (524) (105,223) 
Unrealized gain on derivatives—  —  —  —  2,328  2,328  —  2,328  
Foreign currency translation adjustment—  —  —  —  31  31  —  31  
Pension and post-retirement liability—  —  —  —  (5,415) (5,415) —  (5,415) 
Cash dividends—  —  —  (1,455) —  (1,455) —  (1,455) 
Distributions to non-controlling interest—  —  —  —  —  —  (32) (32) 
Common stock-based compensation plans activity:
Equity-based compensation—  —  6,955  —  —  6,955  —  6,955  
Tax payments related to shares withheld for vested restricted stock and stock units3  (501) (3) —  —  (501) —  (501) 
Balance at June 30, 2020$826  $(181,413) $1,192,068  $(386,110) $(22,910) $602,461  $10,807  $613,268  
Balance at December 31, 2018$818  $(178,215) $1,169,383  $67,854  $(15,020) $1,044,820  $7,484  $1,052,304  
Net loss—  —  —  (13,174) —  (13,174) (93) (13,267) 
Unrealized loss on derivatives—  —  —  —  (3,011) (3,011) —  (3,011) 
Foreign currency translation adjustment—  —  —  —  (34) (34) —  (34) 
Pension and post-retirement liability—  —  —  —  (3,317) (3,317) —  (3,317) 
Cash dividend declared ($0.1250 per share)
—  —  —  (9,456) —  (9,456) —  (9,456) 
Contributions from non-controlling interest—  —  —  —  —  —  5,129  5,129  
Common stock-based compensation plans activity:
Equity-based compensation—  —  6,844  —  —  6,844  —  6,844  
Proceeds from options exercised—  295  (167) —  —  128  —  128  
Tax payments related to shares withheld for vested restricted stock and stock units3  (2,855) (3) —  —  (2,855) —  (2,855) 
Balance at June 30, 2019$821  $(180,775) $1,176,057  $45,224  $(21,382) $1,019,945  $12,520  $1,032,465  
6


U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; dollars in thousands)
 Six Months Ended 
 June 30,
 20202019
Operating activities:
Net loss$(105,223) $(13,267) 
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation, depletion and amortization75,535  89,499  
Goodwill and other asset impairments107,822    
Gain on valuation change of royalty note payable  (14,100) 
Debt issuance amortization2,574  2,640  
Original issue discount amortization518  528  
Deferred income taxes(61,090) (943) 
Deferred revenue(5,002) (17,479) 
(Gain) loss on disposal of property, plant and equipment(1,445) 70  
Equity-based compensation6,955  6,844  
Provision for credit losses, net of recoveries705  2,399  
Other(282) (2,886) 
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable96,278  (28,327) 
Inventories9,941  13,690  
Prepaid expenses and other current assets(21,189) 6,103  
Income taxes1,169  190  
Accounts payable and accrued expenses(106,979) 26,121  
Short-term and long-term obligations-vendor incentives  4,021  
Liability for pension and other post-retirement benefits6,731  5,153  
Other noncurrent assets and liabilities(24,158) 2,232  
Net cash (used in) provided by operating activities(17,140) 82,488  
Investing activities:
Capital expenditures(23,229) (78,451) 
Capitalized intellectual property costs(499) (2,620) 
Proceeds from sale of property, plant and equipment2,478  708  
Net cash used in investing activities(21,250) (80,363) 
Financing activities:
Dividends paid(6,078) (9,372) 
Proceeds from options exercised  128  
Tax payments related to shares withheld for vested restricted stock and stock units(501) (2,855) 
Proceeds from draw down of the Revolver25,000    
Payments on long-term debt(7,024) (8,226) 
(Distributions to) contributions from non-controlling interest(32) 5,129  
Principal payments on finance lease obligations(39) (39) 
Net cash provided by (used in) financing activities11,326  (15,235) 
Net decrease in cash and cash equivalents(27,064) (13,110) 
Cash and cash equivalents, beginning of period185,740  202,498  
Cash and cash equivalents, end of period$158,676  $189,388  



7


U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited; dollars in thousands)
 Six Months Ended 
 June 30,
 20202019
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest$39,818  $